10 Dec 2008

Investors approve Hanover Finance rescue plan

11:53 am on 10 December 2008

Investors in troubled Hanover Finance Company have approved a rescue plan.

More than 1000 investors voted for the proposal instead of putting the company in receivership after a lengthy meeting in Auckland on Tuesday.

It is hoped the debt restructuring plan will save Hanover Finance from receivership after its funds were frozen in July, affecting more than 16,000 investors.

The proposal will see investors repaid the $554 million they are owed at quarterly intervals over the next five years.

It received the support of more than 90% of secured depositors, stockholders and bond holders and more than 75% support from note holders.

Hanover's chairman Greg Muir says investors have clearly understood the real issues and have demonstrated confidence in the company's ability to work through a difficult period.

Secured depositors and stockholders will receive a first repayment in March.

Co-ordinator of the group Exposing Unacceptable Financial Activity, Suzanne Edmonds, said investors voted for the restructuring because they had no other options.

She said the decision to go with the rescue plan was not a vote of renewed confidence in Hanover Finance.

Hanover chief executive Peter Fredricson said people need to focus on getting their money back rather than criticising the rescue plan.

He said the management team now in place is committed to ensuring people get their money back, and is not asking investors to put in more.

Mr Fredricson said the management team will be talking very diligently to borrowers to make sure they are aware the company expects repayments, so it can pay its investors.